Telstra boss defends offshore job move

Telstra Corp chief executive officer Ziggy Switkowski has defended the telco's decision to send as many as 1500 IT jobs offshore.

Dr Switkowski also said the group was tracking in line with its previously stated guidance of expected positive revenue growth.

In an interview on CNBC's "CEO Australia" program, the head of the nation's biggest telco said the decision to move the jobs offshore was part of the group's goal to improve the quality of its service.

The telco came under fire last month after it said 450 IT jobs would be moved to India under an agreement with outsourcing partner IBM Global Services.

That move had been on the cards for several months and was part of Telstra's plan to slash $957 million in costs by sending 1500 jobs offshore over the next few years.

Dr Switkowski said today it was not Telstra's "strategy" to put more jobs offshore.

"But the fact of the matter is that off-shoring or doing work in countries where the expertise is deep and the costs lower is a modern phenomena," he told CNBC.

"So I expect we'll see in our industry and you see it all of our competitors as well, that there will be decisions taken that will recognise the expertise that exists off-shore."

Ahead of next week's release of Telstra Corp's first half results, Dr Switkowski said there was no reason for the telco to change its current guidance.

Telstra has said its guidance for the full year was for positive revenue growth and any cost growth being less than revenue growth.

"We judge the market to be growing at about four to five per cent in aggregate revenues. Our growth rate domestically is less than that," he said.

"When you add in the international numbers which are at the moment handicapped by the strong Australian dollar, we expect to produce steady revenue.

"So no report of growth in revenues," he said. "We are doing a good job in cost reduction. We are doing a good job in cash generation, so cash flows should be strong."

Dr Switkowski said there had been a return of confidence in the telecommunications industry, and that had helped push the group's share price up to around $5.00, compared with $4.75 before Christmas.

However, the current share price did not "fully pick up the potential for Telstra over the next couple of years", he said.

Shares in Telstra closed four cents lower at $4.89 yesterday.

Dr Switkowski said growth in the telecommunications market going forward would come from wireless and broadband technologies.

"There's no doubt communications are moving towards wireless in everything, whether it's personal, residential or corporate or government," he said.

While the take-up of broadband to date was comparatively low compared to other countries, Dr Switkowski said the high speed internet market would grow to rival what the wireless industry was in the 1990s.

Digital technologies was also another area of growth, he said, with Foxtel announcing it was embarking on the era of digital entertainment.

"So digital subscription TV in the next several months will be launched," he said.

"That'll develop a huge industry. Arguably Foxtel will evolve into perhaps the most consequential media enterprise in the land."

Telstra has a 50 per cent stake in Foxtel.

Addressing the issue of executive pay, Dr Switkowski defended his salary package which includes a $1.45 million base wage, plus a potential $7 million a year if certain performance hurdles are let.

"I think that $7 million figure out there has turned out to be unhelpful because it's very very theoretical, and highly improbable," he said.

"But if I were ever to be paid anything like that, I think there would be no doubt that I was worth it because of the heroic achievements that the company would have delivered to get there."